A few weeks ago I wrote an article pointing to Guy’s post on Redfin’s financial performance vs. the financial model that they had built.  Guy has a follow up article with the actual Excel file that Glenn Kelman has been using to run Redfin. 

Not sure that using someone else’s model as a template to build your own is a good idea, but I do think the file demonstrates the level of detail that you need to create a good working financial model.  I just finished working on a detailed revenue model for a consulting client that is over 30 sheets with some of the sheets running as deep as 400 rows. 

Creating a solid financial model and using it to run your business is one of the fundamental actions required to build to a successful business.  Not because you have a great model.  Because it helps you to understand the key drivers of the business.  Understanding the key drivers  focuses management attention on the things that matter.

Its pretty simple and straightforward, but not enough entrepreneurs put enough thought into it.